ACNB Corporation
Annual Report 2018

Plain-text annual report

A HISTORY OF COMMITMENT 2018 ANNUAL REVIEW OUR VISION To be the independent financial services provider of choice in the core markets served by building relationships and finding solutions. The Great Reunion of 1913. Reproducing a historic photograph of Gettysburg’s Lincoln Square at the time of the 50th Anniversary of the Battle of Gettysburg in 1913, this wall mural was unveiled in the Atrium of the ACNB Corporation Operations Center in May 2018. The mural depicts the building constructed in 1908 by The First National Bank of Gettysburg, a predecessor financial institution, on the founding site of ACNB Corporation’s banking subsidiary, now ACNB Bank, in 1857. Report to Shareholders A history of commitment distinguishes ACNB Corporation and its subsidiaries. A history unbroken and continuous, as founded in 1857. Circles of commitment between our organization and its shareholders, employees, customers, and communities served. This commitment is central to ACNB Corporation’s vision and its mission for the subsidiaries of ACNB Bank and Russell Insurance Group, Inc. A RECORD YEAR IN 2018 For the year ended December 31, 2018, ACNB Corporation reported record financial results with net income of $21,748,000 or $3.09 per share. In comparison to the prior year, this is an increase of $11,960,000 or 122.2%. Net income for the year ended December 31, 2017, was $9,788,000 or $1.50 per share. The primary driver of this significant increase in net income was the first full year of combined banking operations and positive momentum experienced following the acquisition of New Windsor Bancorp, Inc. and its wholly-owned subsidiary, New Windsor State Bank, effective July 1, 2017. Also contributing to the Corporation’s strong 2018 financial performance was enhanced revenue growth attributable to subsidiary activities through both ACNB Bank Wealth Management and Russell Insurance Group, Inc. To a lesser degree, the higher net income reported for 2018 was a result of merger-related expenses in 2017 and organic net revenue growth in 2018, aided by a lower effective tax rate due to tax reform under the Tax Cuts and Jobs Act which took effect on January 1, 2018. Similar to other financial holding companies of community banks, the principal component of ACNB Corporation’s net income is net interest income. This fundamental source of revenue is the income derived from the interest earned on loans and investments, less the interest paid on deposits and borrowings. Net interest income is impacted by changes in interest rates, the volume of interest earning assets and interest bearing liabilities, and the composition of these assets and liabilities. By its inherent nature, this income source is predominantly influenced by market interest rates, local economic conditions, stock market impacts, and competitive market dynamics. Net interest income totaled $57,095,000 for 2018, as compared to $46,352,000 for 2017. This year-over-year increase of $10,743,000, or 23.2%, was primarily due to higher loan volume including a full year of interest income on loans acquired through the New Windsor Bancorp, Inc. transaction in 2017. During 2018, the Corporation was challenged given the interest rate environment to balance customer expectations and the need to control the cost of funding loan growth. While the Federal Reserve’s Open Market Committee raised the Fed Funds Rate four times for a total of 100 basis points during the year to 2.50%, there was no corresponding increase in longer term market interest rates. As a result, the competitive marketplace caused interest rates on loans to be restrained, while there was pressure for increased interest rates on deposits. With record financial results in 2018, ACNB Corporation’s return on average assets and return on average equity were 1.34% and 13.62%, respectively, as of December 31, 2018. These ratios compare very favorably to the Corporation’s return on average assets of 0.69% and return on average equity of 7.12% as of December 31, 2017, reinforcing the accretive impact of the New Windsor Bancorp, Inc. transaction. At December 31, 2018, ACNB Corporation’s total assets were $1.6 billion. Total loans outstanding were $1,302,465,000 at year-end 2018, up $58,295,000, or 4.7%, from December 31, 2017, primarily in the commercial loan portfolio, despite the generally slower economic conditions and continued intense competition during 2018 in the Corporation’s markets. Total deposits were $1,348,092,000 at December 31, 2018. Year over year, total deposits rose by $49,600,000, or 3.8%, since December 31, 2017, with significant growth in transaction accounts. SHAREHOLDER DIVIDENDS & EQUITY A key area of strength and differentiation for ACNB Corporation is its commitment to shareholders. This is evidenced by the Corporation’s history of paying a solid and stable quarterly cash dividend on its common stock for decades through times of both economic expansion and recession. In 2018, ACNB Corporation shareholders were rewarded with a 15% increase in the quarterly cash dividend amount from $0.20 per share to $0.23 per share effective with the payment of the cash dividend on June 15, 2018—resulting in a total dividend paid of $0.89 per share for the year. Aggregate dividends paid to all shareholders totaled $6,261,000 during 2018, which is an increase of more than $1,000,000 over the prior year. In 2017, ACNB Corporation paid an $0.80 dividend per share for total dividends paid to shareholders in the amount of $5,233,000. A portion of the increase in total dividends paid in 2018 was a result of new shares issued effective with the acquisition of New Windsor Bancorp, Inc. on July 1, 2017. At December 31, 2018, total stockholders’ equity was $168,137,000. Compared to $153,966,000 at December 31, 2017, this is an increase of $14,171,000, or 9.2%, due to earnings retained in capital in 2018 and new shares of common stock primarily from dividend reinvestment. Fundamental to ongoing capital enhancement is sustained earnings growth year over year. The ACNB Corporation Dividend Reinvestment and Stock Purchase Plan offers registered shareholders the opportunity to purchase additional shares of the 2 | ACNB CORPORATION 2018 ANNUAL REVIEW 3 ACNB CORPORATION 2018 ANNUAL REVIEW |wholly-owned subsidiary, Russell Insurance Group, Inc. ACNB Bank’s community banking operations in the Maryland market are branded as NWSB Bank, A Division of ACNB Bank, and all ACNB Bank customers can conduct business at any of the 29 community banking offices located in Pennsylvania and Maryland. The Corporation’s commitment to the community banking model is predicated upon the continued reinvestment of depositors’ dollars in loans to others for the economic benefit of the communities served. On July 25, 2018, ACNB Bank opened the Hunt Valley Loan Office in Baltimore County, Maryland, which is a natural extension of the Bank’s footprint. This area’s vibrant and growing business sector, coupled with experienced commercial lenders, provided a strategic opportunity to leverage the Bank’s ability to contribute to the success of mid-sized companies and small businesses through proven customer relationship management and competitive products and services. A new initiative to grow core deposits and to build customer relationships was launched in October 2018. With the introduction of Advantage Rewards Checking for personal customers, ACNB Bank furthered its commitment to serving the financial needs of customers while also providing benefits and rewards to assist customers in their daily lives. Advantage Rewards Checking benefits include cell phone protection, personal identity theft assistance, roadside assistance, travel accidental death insurance, and savings on pharmacy, vision and hearing services. Plus, there are money-saving discounts from national retailers. But, most importantly, ACNB Bank worked with local businesses to provide Bank customers with rewards for shopping and dining locally— all accessible via a convenient mobile app. Competition remains keen in the banking industry for both loans and deposits. This competition encompasses local banks and credit unions, nonbank entities, and online providers of financial services. As with all community banks, the growth and quality of ACNB Bank’s loan and deposit portfolios is basic to the ongoing success of the organization and its commitment to safety and soundness for the benefit of all constituencies. ACNB Bank employees also demonstrate their commitment every day through volunteerism and community involvement. In 2018, the Bank’s employees supported 186 community organizations by collectively contributing more than 7,000 volunteer hours in the Bank’s market areas. The community banking offices served as collection points for toys, school supplies, and food items to benefit local community organizations. Additionally, ACNB Bank employees delivered financial literacy presentations in 2018 to over 1,000 students and adults, educating them on the importance of developing sound financial skills for life. WEALTH MANAGEMENT Effective January 1, 2018, ACNB Bank introduced the Wealth Management Division composed of Trust & Investment Services staff and Wealth Advisors. Trust & Investment Services staff provide fiduciary, estate, investment and related services to clients. Assets under management totaled $231,514,000 at December 31, 2018, compared to $224,056,000 at December 31, 2017. Through a third-party relationship, ACNB Bank offers retail brokerage services, including non-deposit investment products, through the brands of ACNB Wealth Advisors and Windsor Wealth Advisors. Assets under management in the brokerage portfolio totaled $109,982,000 at December 31, 2018, compared to $102,689,000 at December 31, 2017. Total revenues from fiduciary, investment management and brokerage activities were $2,364,000 for the year ended December 31, 2018, up 17.5% in comparison to the year ended December 31, 2017, due to new business development and the higher levels of assets under management in the Wealth Management Division. RUSSELL INSURANCE GROUP, INC. Russell Insurance Group, Inc., the insurance subsidiary of ACNB Corporation, is a full-service insurance agency offering a broad range of property, casualty, and life and health insurance to both commercial and personal clients through licenses in 44 states. The agency is based in Westminster, Carroll County, Maryland. It also conducts business at office locations in Germantown, Montgomery County, and Jarrettsville, Harford County, Maryland. Revenues from this subsidiary’s commissions from insurance sales is the most significant source of other income for ACNB Corporation. Commissions from insurance sales totaled $5,550,000 for the year of 2018, as compared to $5,024,000 for the year of 2017. The year-over-year rise of 10.5% is primarily attributable to increased commercial and personal lines commission income and higher contingent commissions received by the agency in 2018. IN CLOSING The Great Reunion of 1913 was the largest American Civil War veteran reunion ever. The Union and Confederate flags flew side by side as more than 50,000 Civil War veterans convened in Gettysburg to commemorate the 50th Anniversary of the Battle of Gettysburg in July 1913. This event symbolizes the commitment of our nation to the ideals of equality and liberty for all citizens. Today, the mural at the Corporation’s Operations Center reproducing this time past on Gettysburg’s Lincoln Square serves as a tribute to these ideals, as well as a reminder of ACNB Corporation’s long history of commitment to its shareholders, employees, customers, and communities served. Commitment is a pledge dependent upon people. At ACNB Corporation, we are indeed thankful for the committed people who serve our customers every business day and who provide oversight on our Board of Directors. Likewise, we are grateful for your continued investment, as shareholders, in ACNB Corporation’s future as we pursue our vision to be the independent financial services provider of choice in the core markets served by building relationships and finding solutions. Sincerely, Frank Elsner, III Chairman of the Board James P. Helt President & Chief Executive Officer Lynda L. Glass Executive Vice President/Secretary & Chief Governance Officer David W. Cathell Executive Vice President/Treasurer & Chief Financial Officer ACNB CORPORATION EXECUTIVE OFFICERS Executive Vice President/Secretary & Chief Governance Officer Lynda L. Glass, President & Chief Executive Officer James P. Helt, Chairman of the Board Frank Elsner, III, Executive Vice President/ Treasurer & Chief Financial Officer David W. Cathell. Corporation’s common stock through the automatic reinvestment of cash dividends and voluntary cash payments on a quarterly basis. The benefit to the registered shareholders who elect to participate in the plan includes the convenience of the acquisition of additional shares of ACNB Corporation common stock, as well as the ability to do so without paying service fees or brokerage commissions. Since the plan’s introduction in January 2011, 153,272 new shares of ACNB Corporation common stock, totaling approximately $3,300,000 in plan investments, have been issued to plan participants as a result of both dividend reinvestment and voluntary cash purchases, which continue to fortify the Corporation’s equity position. ACNB BANK ACNB Corporation’s community banking subsidiary, ACNB Bank, operates in both southcentral Pennsylvania and, as of July 1, 2017, in northern Maryland with the completion of the acquisition of New Windsor Bancorp, Inc. of Taneytown, Maryland, and its wholly-owned subsidiary, New Windsor State Bank. This strategic market expansion across the Mason-Dixon Line resulted in entry to the desirable northern Maryland market of Carroll County adjacent to the Bank’s Pennsylvania footprint and in proximity to the Corporation’s other 4 5 | ACNB CORPORATION 2018 ANNUAL REVIEWACNB CORPORATION 2018 ANNUAL REVIEW |Our Profile and Geography ACNB Corporation, headquartered in Gettysburg, PA, is the financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and Russell Insurance Group, Inc., Westminster, MD. Originally founded in 1857, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 22 community banking offices, located in the four southcentral Pennsylvania counties of Adams, Cumberland, Franklin and York, as well as loan offices in York, PA, and Hunt Valley, MD. As a division of ACNB Bank, NWSB Bank serves its marketplace via a network of seven community banking offices located in Carroll County, MD. Russell Insurance Group, Inc. is a full-service insurance agency with licenses in 44 states. The agency offers a broad range of commercial and personal insurance lines through office locations in Westminster, Germantown and Jarrettsville, MD. CUMBERLAND FRANKLIN ADAMS YORK PENNSYLVANIA WASHINGTON CARROLL MARYLAND FREDERICK BALTIMORE HARFORD HOWARD MONTGOMERY LOCATIONS | ACNB Corporation Operations Center | ACNB Bank | NWSB Bank | Russell Insurance Group, Inc. | Loan Office Visit acnb.com and riginsurance.com for specific locations. 6 7 | ACNB CORPORATION 2018 ANNUAL REVIEWACNB CORPORATION 2018 ANNUAL REVIEW |FINANCIAL HIGHLIGHTS FINANCIAL OVERVIEW 2018 2017 2016 TOTAL ASSETS | In millions of dollars TOTAL DEPOSITS | In millions of dollars FOR THE YEAR Net Interest Income Net Income Cash Dividends Paid PER SHARE STATISTICS Basic Earnings Cash Dividends Paid Book Value (Year-End) AT YEAR-END Total Assets Total Loans Total Deposits $57,095,000 $46,352,000 $36,566,000 21,748,000 6,261,000 9,788,000* 10,869,000 5,233,000 4,840,000 $ 3.09 0.89 23.86 $ 1.50 0.80 21.92 $ 1.80 0.80 19.80 $1,647,724,000 $1,595,432,000 $1,206,320,000 1,302,465,000 1,244,170,000 907,910,000 1,348,092,000 1,298,492,000 967,621,000 Total Stockholders’ Equity 168,137,000 153,966,000 120,061,000 KEY RATIOS Return on Average Assets Return on Average Equity Dividend Payout Average Stockholders’ Equity to Average Assets 1.34% 13.62% 28.79% 9.85% 0.69% 7.12% 53.46% 9.69% 0.93% 9.17% 44.53% 10.10% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 $1,089.8 $1,147.9 $1,206.3 $1,595.4 $1,647.7 $844.9 $913.0 $967.6 $1,298.5 $1,348.1 TOTAL LOANS | In millions of dollars TOTAL STOCKHOLDERS’ EQUITY | In millions of dollars 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 $799.3 $853.0 $907.9 $1,244.2 $1,302.5 $110.0 $114.7 $120.1 $154.0 $168.1 NET INCOME | In millions of dollars BOOK VALUE PER SHARE | In dollars *Without the nonrecurring expenses incurred as a result of the acquisition and integration of New Windsor Bancorp, Inc., net of the corresponding tax impact at the marginal tax rate, in the amount of $3,010,000 and the one-time charge due to the Tax Cuts and Jobs Act in the amount of $1,700,000, ACNB Corporation’s net income for the year ended December 31, 2017, would have been $14,498,000. 2014 $10.3 2015 $11.0 2016 2017 2018 2014 2015 2016 2017 2018 $10.9 $9.8/$14.5* $21.7 $18.29 $18.99 $19.80 $21.92 $23.86 8 9 | ACNB CORPORATION 2018 ANNUAL REVIEWACNB CORPORATION 2018 ANNUAL REVIEW |CONSOLIDATED STATEMENTS OF CONDITION Dollars in thousands, except per share data CONSOLIDATED STATEMENTS OF INCOME Dollars in thousands, except per share data ASSETS Cash and due from banks Interest bearing deposits with banks Total Cash and Cash Equivalents Equity securities with readily determinable fair values Debt securities available for sale Securities held to maturity (fair value $26,911 in 2018 and $44,549 in 2017) Loans held for sale Loans, net of allowance for loan losses ($13,964 in 2018 and $13,976 in 2017) Premises and equipment Restricted investment in bank stocks Investment in bank-owned life insurance Investments in low-income housing partnerships Goodwill Intangible assets Foreclosed assets held for resale Other assets TOTAL ASSETS LIABILITIES Deposits Non-interest bearing Interest bearing Total Deposits Short-term borrowings Long-term borrowings Other liabilities TOTAL LIABILITIES STOCKHOLDERS’ EQUITY Preferred stock (par value $2.50; 20,000,000 shares authorized; no shares outstanding) Common stock (par value $2.50; 20,000,000 shares authorized; 7,108,620 and 7,086,258 shares issued in 2018 and 2017, respectively; 7,046,020 and 7,023,658 shares outstanding in 2018 and 2017, respectively) Treasury stock, at cost (62,600 shares in 2018 and 2017) Additional paid-in capital Retained earnings Accumulated other comprehensive loss TOTAL STOCKHOLDERS’ EQUITY DECEMBER 31 2018 $ 20,105 20,800 40,905 1,839 161,730 27,266 408 1,288,501 26,409 4,336 48,003 1,871 19,580 4,407 155 22,314 2017 $ 19,304 15,137 34,441 1,784 157,267 44,829 1,736 1,230,194 26,774 4,773 44,935 2,446 19,580 2,569 436 23,668 $ 1,647,724 $ 1,595,432 $ 302,394 1,045,698 1,348,092 34,648 83,516 13,331 $ 279,413 1,019,079 1,298,492 36,908 94,600 11,466 1,479,587 1,441,466 — — 17,772 (728) 38,448 121,862 (9,217) 168,137 17,716 (728) 37,777 106,293 (7,092) 153,966 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,647,724 $ 1,595,432 See the consolidated financial statements and accompanying notes presented in the Corporation’s Annual Report on Form 10-K. INTEREST INCOME Loans, including fees Securities Taxable Tax-exempt Dividends Other TOTAL INTEREST INCOME INTEREST EXPENSE Deposits Short-term borrowings Long-term borrowings TOTAL INTEREST EXPENSE NET INTEREST INCOME PROVISION FOR LOAN LOSSES NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES OTHER INCOME Service charges on deposit accounts Income from fiduciary, investment management and brokerage activities Earnings on investment in bank-owned life insurance Gain on life insurance proceeds Net gains on sales or calls of securities Net losses on equity securities Service charges on ATM and debit card transactions Commissions from insurance sales Other TOTAL OTHER INCOME OTHER EXPENSES Salaries and employee benefits Net occupancy Equipment Other tax Professional services Supplies and postage Marketing and corporate relations FDIC and regulatory Merger-related expenses Intangible assets amortization Foreclosed real estate expenses Other operating expenses TOTAL OTHER EXPENSES INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME PER SHARE DATA Basic earnings Cash dividends paid YEARS ENDED DECEMBER 31 2018 $ 59,593 2017 $ 47,522 3,735 219 299 648 64,494 5,253 59 2,087 7,399 57,095 1,620 55,475 3,350 2,364 1,068 52 85 (296) 2,375 5,550 1,400 15,948 26,734 2,971 4,959 902 1,468 766 565 688 — 745 129 4,776 44,703 26,720 4,972 3,389 428 252 194 51,785 3,547 83 1,803 5,433 46,352 — 46,352 2,940 2,012 1,075 — — — 1,762 5,024 1,336 14,149 24,654 2,403 3,757 791 1,134 731 433 644 4,728 537 93 4,174 44,079 16,422 6,634 $ 21,748 $ 9,788 $3.09 $0.89 $ 1.50 $0.80 10 11 | ACNB CORPORATION 2018 ANNUAL REVIEWACNB CORPORATION 2018 ANNUAL REVIEW |Boards of Directors ACNB CORPORATION AND ACNB BANK Officers ACNB CORPORATION Richard L. Alloway II, Esquire Attorney Alloway Law Office Scott L. Kelley, Esquire Partner Barley Snyder LLP Daniel W. Potts Client Executive DXC Technology Frank Elsner, III Owner & Managing Director ODT Global, LLC Chairman of the Board ACNB Corporation and ACNB Bank James P. Helt President & Chief Executive Officer ACNB Corporation and ACNB Bank Todd L. Herring Market Director Pivot Health Solutions James J. Lott President Bonnie Brae Fruit Farms, Inc. Donna M. Newell President & Chief Executive Officer NTM Engineering, Inc. J. Emmett Patterson Owner & President JDCS Enterprise & Fry Guy Corporation Thomas A. Ritter Retired President & Chief Executive Officer ACNB Corporation and ACNB Bank Marian B. Schultz Retired Dean Shippensburg University D. Arthur Seibel, Jr. Chief Operating Officer Springdale Preparatory School David L. Sites Owner Sites Realty, Inc. and Realty Leasing & Management Co. Alan J. Stock Retired Owner & President Eicholtz Company Vice Chairman ACNB Corporation and ACNB Bank James E. Williams President C.E. Williams Sons, Inc. Managing Partner Frantz Plumbing RUSSELL INSURANCE GROUP, INC. Thomas A. Ritter Chairman of the Board Frank Elsner, III Vice Chairman Lynda L. Glass James P. Helt Scott L. Kelley, Esquire Daniel W. Potts Frank C. Russell, Jr. Frank Elsner, III Chairman of the Board James P. Helt President & Chief Executive Officer Lynda L. Glass Executive Vice President/Secretary & Chief Governance Officer David W. Cathell Executive Vice President/Treasurer & Chief Financial Officer ACNB BANK Frank Elsner, III Chairman of the Board James P. Helt President & Chief Executive Officer David W. Cathell Executive Vice President/Treasurer & Chief Financial Officer Lynda L. Glass Executive Vice President/Secretary and Chief Risk & Governance Officer Laurie A. Laub Executive Vice President/ Chief Credit & Operations Officer Tom N. Rasmussen Executive Vice President/ Market President M. Neil Brownawell, II Senior Vice President/ Baltimore Market Executive Lisa A. Monthley Senior Vice President/ Regional Sales Manager Douglas A. Seibel Executive Vice President/ Chief Lending & Revenue Officer Sandra A. Deaner Senior Vice President/ Human Resources Manager Michelle N. Paulnock Senior Vice President/ Information Systems Manager Thomas R. Stone Executive Vice President/ Chief Community Banking Officer Kathy S. Hansel Senior Vice President/ Principal Accounting Officer Lauren L. Shutt Senior Vice President/ Risk Manager Mark P. Bernier Senior Vice President/ Wealth Management Officer Andrew P. Heck Senior Vice President/ Regional Commercial Lending Manager Wayne A. Steinour Senior Vice President/ Agribusiness Lending Manager EXECUTIVE MANAGEMENT AND BOARDS OF DIRECTORS FRONT | ACNB Bank Executive Management: Executive Vice President /Chief Community Banking Officer Thomas R. Stone, Executive Vice President/Chief Credit & Operations Officer Laurie A. Laub, Executive Vice President/Treasurer & Chief Financial Officer David W. Cathell, President & Chief Executive Officer James P. Helt, Executive Vice President/Chief Lending & Revenue Officer Douglas A. Seibel, Executive Vice President/Secretary and Chief Risk & Governance Officer Lynda L. Glass, Executive Vice President/Market President Tom N. Rasmussen. BACK | ACNB Corporation and ACNB Bank Boards of Directors: J. Emmett Patterson, Donna M. Newell, James E. Williams, Scott L. Kelley, D. Arthur Seibel, Jr., James J. Lott, Chairman of the Board Frank Elsner, III, Vice Chairman Alan J. Stock, Daniel W. Potts, Thomas A. Ritter, David L. Sites, Todd L. Herring, Richard L. Alloway II, Marian B. Schultz. 12 13 | ACNB CORPORATION 2018 ANNUAL REVIEWACNB CORPORATION 2018 ANNUAL REVIEW |Officers / CONTINUED First Vice Presidents Karen B. Arthur Barry C. Dillman Vice Presidents Brian T. Adair Daniel K. Baer Redmond C. Beam Duane E. Bock Dawn M. Bornman Cara Lynn Clabaugh Kevin L. Cook David W. Deaner Carolyn M. Dull Assistant Vice Presidents Eric L. Alleman Susan L. Behm Tonya A. Boczek Amber R. Bowers Melissa A. Bremer Andree V. Dennis Kacie N. Dillman Kellie J. Doherty Shawn D. Epling Scott E. Hartlaub Kevin J. Hayes Dennis R. Hollinger Laura L. McCusker Gary W. Rappoldt Merle J. Zehr Tiffany M. Faust Michele K. Ford Gregg A. Gillespie Barbara D. Guise Vickie L. Hoffheins Thomas A. Holmes Grant J. Holub John D. Husser John E. Kashner Heather N. Gormont Jacqueline A. Grasley Nancy L. Hamilton Ginny L. Huntsberry Holly A. Keffer Douglas R. Lindsay Michael E. Lippy George F. Marguglio Julie A. Marshall Frank E. Koser II Gregory S. Liegey Nathan E. Lightner Leslie R. Metzger Celeste M. Miller Scott A. Miller Lauren J. Muzzy Timothy H. Owings Adnan Pasic Joey L. Martin Heather D. Masgalas Sylvia E. Mason Lauren E. McMullen Lisa M. Miller Zachary K. Pretty Susan M. Saylor Sara M. Sciarretta Sonali J. Shah Jacob R. Price Michael W. Rittase Patrick O. Sease Christine R. Settle James E. Showvaker Kathleen P. Wagner Ryan M. Wilhelm Rhonda L. Winterstein Christina D. Ziser Angela M. Sibert Lisa A. Smith Anthony A. Spangler Jeffrey B. Stambaugh Morgan A. Stevenson Ruby L. Sullivan Brian C. Taylor Steven M. Williams Tracy L. Wolf RUSSELL INSURANCE GROUP, INC. Frank C. Russell, Jr. President & Chief Executive Officer Daniel J. Coughlin Vice President David W. Cathell Vice President & Treasurer Lynda L. Glass Vice President & Secretary Contact Information ACNB BANK acnb.com NWSB BANK nwsbbank.com Customer Contact Center Toll Free 1.888.334.ACNB (2262) Customer Contact Center Toll Free 1.844.822.NWSB (6972) 24-Hour Telephone Banking Line Toll Free 1.888.338.ACNB (2262) 24-Hour Telephone Banking Line Toll Free 1.866.276.4979 RUSSELL INSURANCE GROUP, INC. riginsurance.com Toll Free 1.800.289.4097 Shareholder Information 2019 ANNUAL MEETING The Annual Meeting of Shareholders for ACNB Corporation will be held on Tuesday, May 7, at 1:00 p.m. at the ACNB Corporation Operations Center, 100 V-Twin Drive, Gettysburg, PA. All proxy and other materials for the Annual Meeting are available at investor.acnb.com. STOCK LISTING ACNB Corporation common stock is listed and traded on The NASDAQ Capital Market under the symbol ACNB. ANNUAL REPORT ON FORM 10-K A copy of ACNB Corporation’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, may be obtained, without charge, by contacting: Lynda L. Glass Executive Vice President/ Secretary & Chief Governance Officer ACNB Corporation P.O. Box 3129 Gettysburg, PA 17325 717.339.5085 The Annual Report and other Corporation reports are also filed electronically with the Securities and Exchange Commission and are accessible by the public at sec.gov/edgar.shtml. TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT Computershare Shareholder Services P.O. Box 505000 Louisville, KY 40233-5000 computershare.com/investor For shareholder inquiries or information regarding the ACNB Corporation Dividend Reinvestment and Stock Purchase Plan, call Computershare toll free at 1.800.368.5948. FORWARD-LOOKING STATEMENTS In addition to historical information, this document contains forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management or the board of directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: the effects of governmental and fiscal policies, as well as legislative and regulatory changes; the effects of new laws and regulations, specifically the impact of the Tax Cuts and Jobs Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act; impacts of the capital and liquidity requirements of the Basel III standards; the effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; ineffectiveness of the business strategy due to changes in current or future market conditions; future actions or inactions of the United States government, including the effects of short- and long-term federal budget and tax negotiations and a failure to increase the government debt limit or a prolonged shutdown of the federal government; the effects of economic conditions on current customers, specifically the effect of the economy on loan customers’ ability to repay loans; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and interest rate protection agreements, as well as interest rate risks; difficulties in acquisitions and integrating and operating acquired business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; the effects of technology changes; volatilities in the securities markets; the effect of general economic conditions and more specifically in the Corporation’s market areas; the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities; acts of war or terrorism; disruption of credit and equity markets; the ability to manage current levels of impaired assets; the loss of certain key officers; the ability to maintain the value and image of the Corporation’s brand and protect the Corporation’s intellectual property rights; continued relationships with major customers; and, potential impacts to the Corporation from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses. We caution readers not to place undue reliance on these forward-looking statements. They only reflect management’s analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the Securities and Exchange Commission, including the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and any Current Reports on Form 8-K. 14 15 ACNB CORPORATION 2018 ANNUAL REVIEW || ACNB CORPORATION 2018 ANNUAL REVIEWOUR MISSION ACNB Corporation, the financial holding company for ACNB Bank and Russell Insurance Group, Inc., strives to serve the financial and insurance needs of consumers, businesses and other entities through the multiple delivery channels of these subsidiaries. In all of its endeavors, the Corporation seeks to maintain its strength and independence as a leader in the markets served. Our management is dedicated to maximizing long-term investment value to its shareholders by means of: • Providing and marketing quality financial products and services designed to focus on the customer’s objectives; • Ensuring a productive, encouraging and growth-oriented work environment for staff members; • Adopting and leveraging new technologies for the benefit of customer service, operational efficiencies, and/or competitive position; • Managing human and capital resources for the dual purpose of effectively serving and satisfying customers’ needs and enhancing the organization’s profitability; and, • Contributing to the economic vitality and overall well-being of the communities served by actively participating as a responsible and caring corporate citizen. Fundamental to ACNB Corporation’s performance is the commitment to integrity and compliance in business conduct, as well as the recognition that our business is one built upon relationships and trust. COMMITTED TO YOU ACNB.COM | 16 Lincoln Square, PO Box 3129, Gettysburg, PA 17325 

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